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Time and time again we have clients asking us what the difference between a Health Care Directive, Power of Attorney, and a Last Will and Testament is. This is a fair question as these documents are similar in many ways, and it can be tough knowing the differences. This article will explain the purpose of each document, how it is used, and why it is important in hopes to make it a little less confusing.
A simple way to remember the difference between the documents, as Mr. Paterson always says, is you can look at each document as bases as in a game of Baseball. First base is a Power of Attorney moving on to second base being the Health Care Directive, and lastly third base being a Will. This article will follow this metaphor and outline what these documents do for you and what order you will need them in your life.
POWER OF ATTORNEY
Starting with “first base” we have Powers of Attorney. This is a document that allows another individual to act in your stead in a business capacity while you are alive.
The person who creates the Power of Attorney is called the Donor, while the person who is given the power to act for the Donor is called an Attorney. Your Attorney can be anyone over the age of 18 but must be someone you trust completely and know will look out for your best interests.
An Attorney can sign documents and act in place of the Donor should they be unable themselves. Also, a step further than a regular Power of Attorney, the Donor can create what is called an Enduring Power of Attorney, which causes the Attorney to endure, or continue to act, even if the Donor loses mental capacity.
A Power of Attorney is a very important document because it allows for one’s interests to be managed, when the Donor is not available or unable to do so for themselves.
There are a number of situations when a Power of Attorney can be used, and a few examples are:
Selling Property The Donor has decided to move to a foreign country, but while in the foreign country someone has offered him a very good price for some land he owns. The Attorney can sign the land transfer documents on behalf of the Donor while they are out of the country.
Paying Bills, Accessing Bank Accounts, and Managing Investments The Donor has lost mental capacity and needed to be moved into a care home. The Attorney during this time can access the Donor’s accounts, ensure that the bills are paid, and that their investments are being properly managed.
An important thing to remember is a Power of Attorney can only be created while the Donor has capacity. In its most basic form loss of capacity means someone who cannot make decisions on their own or for their best interests.
If someone is involved in an accident and loses mental capacity it becomes impossible to retroactively create a Power of Attorney and without one, it becomes very difficult to appropriately handle the persons affairs. In a situation where someone loses mental capacity and doesn’t have a Power of Attorney, the only option moving forward would be to have the court appoint a Committeeship. This Committeeship would then act in place of a Power of Attorney and make decisions that reflect the best interest of the person they are appointed for. This process is considerably more expensive and can take months to complete, which makes talking with a lawyer and preparing a Power of Attorney the better option.
HEALTH CARE DIRECTIVE
Following first base, we now move on to “second base” … the Health Care Directive. This is one of the most misunderstood documents we get questions about.
Basically, a Health Care Directive is a simple medical form that expresses the writer’s medical wishes if they are incapacitated. It is a standard government form that can be freely accessed and completed.
The form has the writer appoint one or more medical proxies, who can make medical decisions on the writer’s behalf. Like the Power of Attorney who you choose as your representative is very important. The proxy should be someone you trust who is a legal adult. Being a medical proxy can be very difficult, therefore it is recommended one has a discussion with their potential proxy beforehand.
A Health Care Directive is a simple form, and it is not required or necessary to meet with a lawyer to prepare or review. Our office recommends that everyone writes their own Health Care Directive and gives a copy to their doctor as well as their appointed medical proxy in case of an emergency.
LAST WILL AND TESTAMENT
The final base, and the most well-known, is the Last Will and Testament. A Will is a document which expresses in varying detail how a person wishes for their possessions to be distributed when they pass away.
Everything a person owned at the time of their death is referred to as their estate. The person who writes the Will is called a Testator and a person who benefits from the Will is called a Beneficiary.
Similar to the Power of Attorney and Health Care Directive, the Testator is required to appoint someone to administer the Will to ensure it is followed correctly and that person is called an Executor.
The Executor is required to follow the Will to their best ability and cannot act in any way that is contrary to the will of the testator. A Will ensures that the testator’s final wishes are followed, and expenses managed after ones passing which helps avoid unnecessary conflict between beneficiaries, family members or other people within the Testators life.
A Will is a very important document, and one should seek out legal counsel to ensure their wishes are written as accurately as possible.
CONCLUSION
To summarize a Health Care directive allows one’s medical wishes to be followed, a Power of Attorney allows someone to act in place of oneself while they are still alive for business related issues, and a Will ensures that one’s final wishes are followed once they have passed away.
Ultimately, a Power of Attorney, Health Care Directive and Last Will and Testament all serve different purposes however they are all important to deal with scenarios out of your control. It is always our recommendation to speak with a lawyer if you are considering preparing these documents to ensure they are done properly to protect yourself, and your wishes.
If there are any specific questions you have regarding these documents, or you wish to have these documents prepared, please contact our office and any one of our lawyers would be happy to assist you.